‘The process is not satisfactory from anyone’s point of view’, says Professor Andrew Baum, who has written a report analysing the future of the real estate sector.
Photograph: Christopher Furlong/Getty Images

The property sector is a multi-billion pound industry that affects all of us at some point in our lives. But, dominated by large, traditional high-street estate agents, it operates in a way that can feel incredibly archaic and confusing for all involved.

“There are clear problems with how UK houses are transacted,” says Professor Andrew Baum of the Saïd Business School at the University of Oxford. Baum, who is publishing a report on the future of real estate later this month, sees great potential for businesses to disrupt the way houses are bought and sold.

Our first trade show was scary to say the least, but we didn’t find the hostility we were expecting from letting agents

Calum Brannan

“The process is not satisfactory from anyone’s point of view. Estate agents aren’t aligned with the vendor, they aren’t motivated to get the best price or best execution, [they just want] a fast sale,” he says. “There’s a lot of money to be saved and therefore a lot of money to be made from tech platforms that can make that process more efficient.”

It’s a trend that began with Rightmove (launched in 2000) and Zoopla (2008), which list properties online in partnership with established estate agents. In contrast, new challengers such as Purplebricks, Settled and Housesimple.com are digging into their market share by doing business on a fixed-fee basis, rather than taking a percentage from a sale, and facilitating viewings and offers that are managed online.

Alex Gosling is the CEO of HouseSimple.com. He says bricks-and-mortar businesses look out of date at a time when most property searches start online. Having no physical presence on the high street also allows him to keep his overheads low. His business has managed the sale of more than 18,000 properties via its platform since launching in 2015 which, he estimates, amounts to £40m in saved fees. The site charges sellers a flat fee from £595, compared to an average agent fee of 1.3%, or £2,827, on the average UK house price.

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“As more people feel comfortable with the online model, we expect online agents to grab a bigger slice of the UK estate agency market. Currently, online estate agents have around 5% market share. We believe this will increase to 15%–20% by 2020,” Gosling says. In 2016, the business received £13m of investment from Carphone Warehouse founder, Sir Charles Dunstone.

With many people struggling to get on to the property ladder, the UK’s private rental market is booming. In 2016, real estate company Savills reported the sector is now worth £1.29tn and had grown 55% in the previous five years. Aidan Rushby hopes to make the sector more transparent and user friendly with his firm Movebubble, which he founded in 2014. “Renting a new home sucks today, we simply want to make this fun and exciting like it should be,” he says.

The app has 10,000 users per month, despite only covering London, and enables renters to search properties that are updated in real time (to prevent the disappointment of seeing listings that are already off the market). Its algorithm also learns about users’ preferences as it goes, providing more tailored results each time they search. Renters can book viewings, and make offers through the platform and Rushby estimates they save renters an average of 20 hours of research.

Movebubble has already raised £2.4m in investment, and there are plans to roll out nationwide. Rushby adds there is “a huge amount of inefficiency” in the lettings sector and he hopes simplifying the process will be passed on to renters in terms of lower rents. It’s currently free to search but agents are charged £80 per successful move.

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Agents are often not well loved by renters, partly because of the fees they charge – the latest English Housing Survey puts the average figure at £223 per tenancy agreement. Some entrepreneurs are developing models that cut them out of the equation entirely. Calum Brannan, founder of prop-tech management company No Agent, offers landlords a way to manage their own properties online for a fixed fee – £35 per month outside London and £45 inside the capital. There are no additional charges for finding tenants, referencing or credit checks and there’s a 24/7 call centre for both landlords and tenants.

Brannan launched the business in June 2016, raising over £580,000 through crowdfunding and now has 20 in-house staff, plus 500 consultants to manage viewings. Gillian Kent, former CEO at Propertyfinder.com (which she sold to Zoopla), has also joined the board as chairperson.

“I think we’ve innovated on price,” says Brannan. “We don’t lock people into long contracts – they can leave with 30 days notice. We give landlords a lot of control as they can see their properties online. [And] it’s good for tenants as they can use the platform to manage repairs and the payments they’ve made.”

Despite making much of their role obsolete, Brannan says he’s been surprised by the positive reaction of the lettings sector. “Our first trade show was scary to say the least, but we didn’t find the hostility we were expecting from letting agents. [Many of them] love the technology aspect and even enquired about licensing. It’s great to see the industry is showing signs of wanting to change.

“We don’t want to see the complete demise of the traditional letting agent, but we do want to see significant improvement and transformation in the sector. I thought that our customers would be younger and tech savvy. But we’ve got a wide range of customers.”

Brannan knows just a small piece of the UK property market offers major returns for his company. “There are approximately 2 million private landlords in the UK and just 2.5% of this market would be worth £50m in turnover,” he predicts. “Our plan is to chip away at this market by going against the status quo, and championing good customer service. Our ultimate goal is to do for the lettings industry what AirBnB did to the hotel industry.”

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